Learning From Your Investors: Tips From 5 Top Venture Capitalists

Don’t just focus on the money. Investors are here to help your company succeed in more ways than one.

There were more than 12,000 financial technology startups worldwide at the end of 2014, according to McKinsey & Co., and the sector has continued to boom. In 2015, fintech startups in particular raised more than $12 billion. This a lot of money, and I know the work it takes to earn that much.

When I wanted to start my company Trulioo, I moved from Canada to the Silicon Valley to be closer to potential investors. Although my earlier businesses were also financial tech companies, Trulioo was my first experience taking outside investment. The process was grueling, but also enlightening.

When I got to Silicon Valley, I started in an incubator and met with venture capitalists. One hundred pitches later, and I secured an initial round of funding. I learned a lot of valuable lessons along the way. I’ve been fortunate to receive great advice from venture capitalists throughout this journey. I reached out to my top five VC picks based on who has been the most helpful and asked them to share their thoughts on what entrepreneurs in the space need to succeed (for obvious reasons, I excluded investors in Trulioo).

Don’t Focus on the Money

One of the most important lessons was to stop talking and start listening. The best thing you can do while meeting a potential investor is to say as little as possible—just listen. Like I did, most entrepreneurs go to Silicon Valley and plan to pitch their idea until someone gets it. But it’s smarter to share some of your ideas in a conversation with those more experienced who have already seen businesses succeed and fail. Because where else in the world can you get that kind of advice for free? That’s the most valuable thing Silicon Valley can offer an entrepreneur. These conversations are embedded into every aspect of our business, whether through data, partnerships or monetization ideas.

Rohit Bodas of American Express Ventures is an engineer-turned-VC who keeps his finger on the pulse of financial services, payments, digital commerce and big data. He’s well versed in the industry. His suggestion: “Focus on building a brand that can earn you the trust of dealing with people’s money.”

John Locke (partner at Accel Partners, which focuses on investments in financial technology, enterprise software and consumer internet companies) also had valuable advice for business planning. “Focus on nailing a specific fintech vertical first. Most of the best fintech companies started around simple premises: Braintree for helping e-commerce companies accept payments, Lending Club for making it easier to consolidate credit card debt, Square in helping glassblowers accept credit cards. All of these are multibillion-dollar companies today but none started out trying to build the next Amex or Chase on day one,” he says.

Advice, specifically from VCs embedded in the industry you plan to disrupt, can be more valuable than any monetary investment.

Stay Present, Engaged and Honest

Although I had a million things on my mind, I worked to be present and engaged in meetings so I could retain information and ask smart questions. I also worked hard to keep an open mind and be receptive to different perspectives on how to grow my business.

I chose the VCs I met with carefully, based on their experience, connections and how they could add value to my company. However, I was also asking them to invest in a business that hadn’t yet proven itself, so I was clear about what I knew, what I didn’t know and why I wanted help. I was honest about the challenges my business faced and my plans to tackle them, and I think this honesty was one of the reasons I developed great working relationships with so many VCs, including those who never even invested in the company

With a deep track record in financial services, Jon Soberg (co-founder and managing partner at Expansive Ventures) is an active investor with a wealth of experience leading investments in financial services and technologies. His top advice?

“I normally invest pre-product, before there is any kind of revenue signal, so I tell entrepreneurs to build the best teams that truly understand their market. Fintech markets are complex with major players, and execution can be very difficult. [But] great teams find ways to win.”

Listen to Feedback and Take Advice (Even If You Aren’t Taking Money)

By actively listening, I learned what was possible and what wasn’t, and that turned out to be the most useful part of the process. Fundraising teaches you about your business, which becomes a living, breathing thing rather than a written plan. Trulioo changed month-to-month because of the feedback we got and to this day, we continue to innovate based on changes in the marketplace. Once we completed our seed round, our business concept was stronger than when we started, and we had a plan to accept venture capital and scale.

Sanjiv Kalevar, an associate at Battery Ventures who previously ran three industry-specific software businesses and spent time with 37signals (now Basecamp), said this: “My advice for fintech entrepreneurs is to pay special attention to user experience and product design. While there is a growing trend in the software industry more broadly to embrace design thinking and usability, I think the opportunity for fintech entrepreneurs is particularly large, given the dreadful state of many financial applications we use today. While finance often comes down to dollars and cents, let’s not forget the human side.” Focused on financial services and enterprise SaaS, Kalevar manages Battery’s investments in companies like RiskIQ, SmarterHQ and mParticle. (For a full list of Battery Ventures investments, click here.) Kalevar’s advice—coming from someone who clearly knows his space—is a valuable perspective, regardless of his VC status.

Finally, I also learned that you can’t accept money from everyone. Out of the 100 VCs we met with, only a handful continue to help us out through introductions or good advice. Most are not investors in the company, but are an example of how the best venture capitalist—at least in my industry—work. They’re passionate about what they do and understand that everyone benefits when startups in the sector succeed.

The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.